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Lawmakers and small businesses waiting for verdict on health reform

by Grant Gerlock

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Grant Gerlock

March 22, 2012 - 7:00pm

While Nebraska leads a 26-state challenge of the Affordable Care Act in the U.S. Supreme Court, the state also continues to explore how to carry out one of the law's main features: the creation of health insurance exchanges. The court's decision on the health care reform law will determine whether the state's efforts continue, and whether small businesses someday become customers of a Nebraska exchange.

Nebraska Attorney General, Jon Bruning

Attorney General Jon Bruning will represent Nebraska at the arguments March 26-28. The Supreme Court has scheduled six hours of debate. Most cases only take one hour to argue.

"The last time anybody can remember a multi-day argument was the Miranda case in the 60s. So it's really a once-a-generation or even rarer case," Bruning said.

The issue expected to dominate the proceedings is the government's individual mandate to buy health insurance. For Bruning, the issue goes beyond health insurance.

"You're now being penalized for first time in American history by a government that says you must participate in commerce," Bruning said. "You'll be penalized by the government if you don't buy health insurance. Can federal government require States to do certain things? Which is preeminent, the federal government or the state governments?"

Graphic by Hilary Stohs-Krause, NET News

Twenty-six states across the U.S. have joined Nebraska's Supreme Court challenge of the Affordable Care Act.

Click on map to see how other states have progressed on health exchanges, as compiled by the National Conference of State Legislatures.

Photo by Grant Gerlock, NET News

The smaller the business, the less likely it is to provide health coverage for employees.

Jay Angoff, Acting Director of the region that includes Nebraska for the U.S. Department of Health and Human Services said he was confident the Supreme Court will rule in favor of the law. The reason for the mandate, Angoff said, is that people who currently pay for health insurance are already bearing the cost from people who do not.

"Because those people are going to get health care anyway and they're probably going to get it at a later time when it's more expensive, and when their conditions are more serious, through the emergency room than they would if they got care earlier when their conditions are less serious," Angoff said.

While the Supreme Court deliberates over the Affordable Care Act, Nebraska will keep studying how to implement a state-based health exchange.

Starting in 2014, people would go to an online exchange to compare similar health plans. Through the exchange, people would learn if they qualify for government health programs like Medicaid or federal subsidies to help pay for private insurance. The exchanges would also be targeted toward small businesses. Angoff said insurers presently have an advantage when setting prices for small companies.

"What the exchanges do is allow small businesses to, in effect, combine the bargaining power of all small businesses in negotiating with insurance companies and thereby getting better rates," Angoff said.

Depending on the state, businesses up to 100 employees would be able to shop on a health exchange. That would include nearly 40,000 businesses in Nebraska according to the U.S. Census Bureau. Businesses with up to 25 employees could also earn tax credits for helping employees pay for coverage.

At the Young Entrepreneur Summit recently held at the University of Nebraska Omaha, Pat Brown-Dixon of the federal Small Business Administration said entrepreneurs often give health care the back seat to the bottom line.

"Many (entrepreneurs) have been under their parents' or family's insurance policies so they have no clue," Brown-Dixon said. "And then they start looking at their bottom line and they start trying to make a choice, Okay am I going to sacrifice health care?' And that's a very significant question because just one accident can change everything."

The risk of going without insurance can also be an obstacle for potential entrepreneurs. Joi Katskee of Omaha was at the summit because she would like to turn her interest in style into a business. But she wondered about health care.

"Cause that's one thing. I have a good job now and it has full benefits," Katskee said. "And then, if I really want to do something I love and I wouldn't have great health benefits, how do I cover myself?"

Officials hope the health exchanges make it easier for people like Katskee to make health care part of their business plan.

Eleven states have passed laws creating health exchanges . Four of those are also Nebraska's partners in the Supreme Court lawsuit. Nebraska is also hedging its bets on the Supreme Court turnout. Two competing health exchange bills (LB838, LB835) were introduced in the Nebraska Unicameral this year. Neither appears likely to pass. Some, like Bruce Rieker of the Nebraska Hospital Association, would like to see lawmakers move more quickly.

"The basic premise is, do all that we can to keep our options open so that as we come to each fork in the road, whether it's the Supreme Court or whether it's legislative action, we have all of our options available to us," Rieker said.

One important option would be to secure federal funding to help pay for setting up an exchange so that the state is not forced to foot the entire bill. Nebraska has been awarded more than 6 million dollars in federal support to study how to design a state exchange. But Bruce Ramge, the Director of the state Department of Insurance, said lawmakers do not need to make any final decisions.

"The main thing we need to do in order to keep our options open is to just continue to show suitable progress is being made towards the exchange," Ramge said.

Whether or not there will be any need for a state health exchange may balance on a legal term called severability . If one part of the law falls, like the individual coverage mandate, does the rest of the law stand? The answer to that question will come as soon as June when the Supreme Court releases its decision.